China's iron and steel prices rose on May 11 amid growing optimism about demand as inventories of rebar used in construction continued to fall and demand from the real estate market strengthened.
"Chinese steel demand continues to beat expectations. Real estate investment and housing starts are picking up, while infrastructure spending remains elevated," said ANZ in a research note.
"After some restocking in late March ahead of a key maintenance period, the scene is set for steel mills to re-enter the market."
Stockpiles of steel rebar have fallen almost a third since mid-March, when inventories were at a multi-year peak at 9.79 million tonnes, dropping to 6.71 million tonnes as of May 4, data showed.
At 10:35 a.m. (0235 GMT), the most-active construction rebar futures on the Shanghai Futures Exchange were up 1.7% at 3,653 yuan/t ($575.73/t).
Iron ore futures on the Dalian Commodity Exchange rose 0.8% to 473.5 yuan/t.
Steelmaking raw materials have been boosted by hopes of restocking by mills amid expectations of higher production after a prolonged winter.
The outlook for iron ore has picked up in recent weeks, ANZ said, citing recent Chinese economic data.
The bank said an expected surplus in 2018 has all but evaporated, as it maintained its view that prices have limited downside. It expected prices to push back towards $69/t over the next few months.
A prolonged mine outage in Brazil and falling exports from India and Sierra Leone will also cut supplies, it said.
Iron ore for delivery to China closed at $66.83 .IO62-CNO=MB on May 10.
(Writing by Tammy Yang Editing by Jessie Jia)
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